Alibaba’s full-year revenue grew 58% in fiscal 2018 (April 2017 to March 2018), core commerce revenue grew 60%, with profit growth of over 40% and annual free cash flow of US$15.8 billion. Looking ahead to fiscal 2019, Alibaba expect overall revenue growth above 60%.
Revenue from Alibaba’s core commerce increased 60% year-over-year to RMB214.02 billion(US$34.12 billion), the highest revenue growth rate since Alibaba’s IPO. Alibaba’s China retail marketplaces recorded a total GMV of RMB4,820 billion (US$768 billion), up 28% year-over-year. Tmall physical goods GMV increased 45% year-over-year.
- Revenue from cloud computing increased 101% year-over-year to RMB13.390 billion (US$2.135 billion).
- Revenue from digital media and entertainment increased 33% year-over-year to RMB19.564 billion (US$3.119 billion).
- Revenue from innovation initiatives and others increased 10% year-over-year to RMB3.292 billion (US$0.524 billion).
Adjusted EBITA increased 40% year-over-year to RMB97.003 billion (US$15.465 billion). Non-GAAP net income was RMB83.214 billion (US$13.266 billion), an increase of 44% year-over-year. Non-GAAP diluted EPS was RMB32.86 (US$5.24), an increase of 40% year-over-year.
In Q1 2018, Alibaba’ revenue grew 61% year-over-year to RMB61.932 billion (US$9.873 billion).
- Revenue from core commerce increased 62% year-over-year to RMB51.287 billion (US$8.176 billion).
- Revenue from cloud computing increased 103% year-over-year to RMB4.385 billion (US$0.699 billion).
- Revenue from digital media and entertainment increased 34% year-over-year to RMB5.272 billion (US$0.84 billion).
- Revenue from innovation initiatives and others increased 8% year-over-year to RMB988 million (US$158 million).
Adjusted EBITA increased 11% year-over-year to RMB16.805 billion (US$2.679 billion). Non-GAAP net income was RMB14.099 billion (US$2.248 billion), an increase of 35% year-over-year. Non-GAAP diluted EPS was RMB5.73 (US$0.91), an increase of 32% year-over-year.
Alibaba’s Core Commerce in Fiscal 2018
Fiscal year 2018 witnessed the success of Taobao App’s strategy to redefine the shopping experience through innovative content formats and intelligent personal recommendations. These initiatives drove strong growth in user engagement, purchase conversion, and annual active consumers.
A robust content ecosystem has developed around the Taobao App to propel it into one of the most popular mobile apps in China. As of March 31, 2018, approximately 1.5 million content creators were actively supporting the Taobao App and helping brands on the platform engage with consumers through curated posts, short-form videos, and live-broadcast events.
Alibaba achieved strong results from investments in user acquisition, engagement and repeat visits and transactions. In March 2018, Alibaba achieved a net increase from the prior quarter of 37 million mobile MAUs on its China retail marketplaces to a total of 617 million mobile MAUs. The robust growth of mobile users and a successful Chinese New Year promotional campaign resulted in the increase of annual active consumers to 552 million for the 12 months ended March 31, 2018.
Tmall – reaccelerating growth and furthering market leadership. Tmall continued to gain wallet share and expand B2C market leadership, with physical goods GMV up 45% year-over-year in fiscal year 2018.
For the fiscal year 2018, Tmall recorded 45% year-over-year growth for physical goods GMV, reflecting strength in apparels, FMCG, home appliances and consumer electronics categories. Tmall demonstrated its strong value proposition to brands and merchants not only as a distribution platform but also an enabler for brands and merchants to reach new customers and service repeat customers through Alibaba’s marketing tools and consumer data insights.
Tmall continues to be the platform of choice for some of the world’s top brands. H&M, Marni, and Yonex established flagship stores on Tmall this quarter. As of March 31, 2018, there were over 150,000 brands on Tmall. Alibaba’s newly established Luxury Pavilion now counts close to 50 brands, including Burberry, Dom Perignon, Tod’s, Zenith, La Mer, Maserati, and Guerlain.
New Retail. Through incubation of new concepts and technologies and strategic alliances, Alibaba’s New Retail strategy is shaping consumer behavior of the future by offering a seamless integration of online/offline shopping experience.
In the process, Alibaba is driving a massive transformation of the traditional retail industry by digitizing the entire retail operation, with a focus on in-store technology, digitized inventory and supply chain systems, consumer insights and mobile payments.
Hema, a unique proprietary grocery retail format, exemplifies the convergence of online and offline activities by using retail stores to the warehouse and fulfill online orders in addition to offering a rich and fun experience for customers who shop in-store.
Because of the proximity of store locations to consumer communities, Hema can deliver to customers who order online within 30 minutes. Recently, Hema started a 24-hour delivery service in Shanghai and Beijing with an expanding selection of products.
International – investments for long-term growth. Alibaba’s cross-border and international retail businesses continue to show promising growth. Revenue from international commerce retail business grew 94% year-over-year in the fiscal year 2018.
Over the past year, Alibaba has integrated Lazada’s operations into the Alibaba ecosystem by re-architecting its core technology infrastructure and strengthening its management team.
Southeast Asia has developed into a very competitive market but is still in the early stages of online retail penetration. Alibaba’s commitment to the region is reflected in its recent decision to invest US$2 billion, in addition to the approximately US$2 billion it has already invested, into Lazada to accelerate its growth and customer reach.
On the cross-border trade front, Tmall Global is the premier platform for overseas brands and retailers to reach Chinese consumers, build brand awareness and gain valuable Chinese consumer insights without the need for physical operations in China.
As of March 2018, there were 18,000 brands from 74 countries and regions selling into China through Tmall Global. According to Analysys, during the nine months ended in December 2017, Tmall Global was the number one cross-border e-commerce platform in China based on transaction value.
Cainiao Network. Cainiao Network continued to develop its data platform and technology as the infrastructure for its New Retail strategy and means to ensure faster and more accurate delivery to consumers. In March, Alibaba launched the first e-commerce dedicated intercontinental flight, significantly shortening the delivery time of packages shipped from China to Russia.
Cloud computing revenue grew 101% year-over-year to RMB13.390 billion (US$2.135 billion) in fiscal year 2018, driven by robust growth of paying customers and increasing revenue-per-customer, reflecting higher value-added products.
According to IDC, Alibaba Cloud is the leader in China’s market for infrastructure-as-a-service (IaaS) with a 47.6% market share as measured by revenue in the first half of 2017, an increase from 42.4% in the first half of 2016. Alibaba is seeing significant traction and diversification of customers and revenue and will continue to invest to further expand the market by developing value-added products and features.
Innovation Initiatives & Technology Development
During fiscal year 2018, several of Alibaba’s innovation initiatives resulted in products that have acquired significant user scale.
AutoNavi is the largest provider of mobile digital maps, navigation, and real-time traffic information in China by daily active users as of March 2018, with the number of daily active users reaching approximately 60 million, according to QuestMobile.
AutoNavi’s open digital map platform also powers major mobile apps for food delivery, ride-hailing service, and social networking. During this quarter, AutoNavi’s proprietary navigation system for vehicles (AMAP AUTO 3.0) was launched and implemented in select vehicles of major China automakers.
DingTalk, with messaging as its core product feature, has successfully penetrated the enterprise communication and collaboration market. DingTalk unifies the critical tasks of communication and collaboration in the workplace, offering text, photo, voice and video communication, collaboration features and workflow management, such as convenient attendance recording and expense approval features.
Ele.me – a strategic acquisition that will enlarge Alibaba’s addressable market and better service its consumers. On April 2, 2018, Alibaba announced the agreement to acquire the remaining outstanding equity interest in Ele.me, one of the two leading online food delivery platforms in China.
According to Analysys, the size of the online food delivery industry in China was RMB208 billion (US$33 billion) in 2017. Through this acquisition, Alibaba will integrate Ele.me, which operates in over 600 cities serving millions of consumers, into Alibaba’s ecosystem and its local delivery network will become a core piece of Alibaba’s New Retail strategy.
Ele.me’s consumer reach and its relationship with restaurants will be complementary with Koubei, Alibaba’s joint venture with Ant Financial that provides listings of local service establishments including restaurants, bars and beauty salons. By combining Ele.me’s online delivery service with Koubei’s consumer engagement capability for a range of food and beverage-related and other service establishments, Alibaba will be able to offer an integrated local services experience to consumers.
During the fiscal year 2018, Alibaba agreed to take a 33% equity stake in Ant Financial to strengthen the strategic relationship pursuant to a series of agreements reached with Ant Financial in 2014.
During the fiscal year ended March 31, 2018, Alipay, together with its global JV partners, served around 870 million annual active users globally. Ant Financial also supports economic development in China by serving more than 15 million small businesses as of March 2018 through lending, cash management, and insurance services.